OPM (Operating Profit Margin)

Fundamental Library

Accumulated Depreciation
Adjustments (Cash Flow from Operating Activities)
Advance from Customers
Asset Turnover
Bonus Issue
Book Value / Equity Capital
CAGR (Compound Annual Growth Rate)
Capital Work in Progress (CWIP)
Cash and Cash Equivalents
Cash Conversion Days
Cash Flow Per Share (CF/Share)
Cash From Financing
Cash From Investing
Cash From Operations
Changes in Working Capital
Common Sized
Consolidated Financial Statements
Current Assets
Current Investments
Current Liabilities
Current Ratio
Discount Rate
Discounted Cash Flow (DCF)
Dividend Yield
Effective Tax Rate
Employee Cost
Exceptional Items (Income Statement)
Executive Director
Face Value
Fair Value
FCF Per Share
FII (Foreign Institutional Investor)
Financial Leverage Multiplier in Du Pont Analysis
Free Cash Flow Yield
Government Holding
Gross Block
Implied Growth Rate
Independent Directors
Institutional Holdings
Interest Coverage Ratio
Interest Expense
Inventory Days
Long Term Loans & Advances
Long Term Provisions
Manufacturing Expenses
Market Cap
Net Block
Net Cash Flow
Net Profit
Non-Current Assets
Non-Current Investments
Non-Current Liabilities
Non-Executive Director
Non-Independent Directors
NPM (Net Profit Margin)
OPM (Operating Profit Margin)
Other Current Assets
Other Current Liabilities
Other Expense
Other Income
Other Non-Current Assets
Payable Days
Power Fuel Cost
Promoter Pledge
PV (Present Value)
Quarterly Results
Raw Material Cost
Receivable Days
Retail/Public Shareholding
Rights Issue
ROA (Return on Assets)
Secured Loans
Selling and Distribution Costs
SGA costs
Share Capital
Shareholding Pattern
Short Term Borrowings
Short term loan and advances
Short Term Provisions
Standalone Financial Statements
Stock Splits
Tax %
Total Expense
Trade Payables
Trade Receivables
Unsecured Loans

OPM (Operating Profit Margin)

Explanation: Operating Profit Margin (OPM) calculated from EBITDA assesses the efficiency and profitability of a company’s core business operations by measuring the proportion of operating profit (EBITDA) relative to total revenue. It provides insight into how effectively a company generates profit from its primary business activities, excluding non-operating expenses such as interest, taxes, and depreciation. A higher OPM indicates robust profitability from core operations, while a lower OPM suggests challenges in generating profits from primary business activities.

Companies with high OPM typically demonstrate strong pricing power, efficient cost management, and effective utilization of resources in their core operations. Industries such as technology, pharmaceuticals, and software often exhibit high OPM due to their ability to maintain healthy profit margins and efficient operational structures.

Companies with low OPM may operate in industries characterized by thin profit margins, intense competition, or high operating expenses relative to revenue. Sectors such as retail, hospitality, and transportation often face challenges in maintaining high OPM due to competitive pressures and rising costs.

To analyze trends in profit margins, it’s essential to track changes in OPM over time and compare them with industry benchmarks, historical performance, and peer companies. Increasing OPM trends suggest improving operational efficiency and profitability, while decreasing OPM trends may indicate operational challenges or declining profitability. Evaluating the underlying factors influencing OPM changes, such as shifts in revenue mix, cost structures, pricing strategies, or operational efficiencies, provides valuable insights into a company’s financial health and competitive position.

Example: TCS reports an Operating Profit Margin (OPM) of 26.21% as of FY23. This indicates that TCS generates an operating profit equivalent to approximately 26.21% of its total revenue from core business operations before accounting for non-operating expenses. TCS’s relatively high OPM underscores its efficient operational management and strong profitability within the IT sector. Analyzing trends in TCS’s OPM enables stakeholders to assess the company’s operational efficiency, profitability trajectory, and competitive standing over time.

You can view the quarterly and annual Operating Proft Margin percentage for any company on Radar in the Quarterly Results or Yearly P/L sections.

Open Demat Account